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The Peak Oil Crisis: When?

August 26, 2014 in EIA, EV News, IEA, Oil

Tom Whipple Photo courtesy of Post Carbon Institute

Tom Whipple
Photo courtesy of Post Carbon Institute

By Tom Whipple, Post Carbon Institute

For those following the world oil production situation, it has been clear for some time that the only factor keeping global crude output from moving lower is the continuing increase in U.S. shale oil production, mostly from Texas and North Dakota. Needless to say, once the fabled “peak” comes oil and gasoline prices are certain to move higher, triggering a series of economic events most of which will not be good for the global economy.

Thus the key question is just how many more months or years production of U.S. shale oil (more accurately call light tight oil) will continue to grow. Many have answers to this question ranging from the “next year or so” on out the middle or end of the next decade. Some forecasts as to time remaining until the “peak” arrives are politically tinged. No politician, business manager, or even investor wants to hear that serious economic problems affecting their lives may be only a few years away. Fortunately for these folks, there are many forecasters available to spin stories about how “technology” will enable US shale oil production to continue on into the dim future of the 2020’s which most of us really can’t comprehend or plan for.

Usually missing from optimistic estimates for future U.S. shale oil production is any discussion of just how fast production from fracked wells declines. Most fracked wells are adequate or at least economic producers for three years or so, after which their production is so small that they need to be replaced or reworked to keep a meaningful amount of production going. As shale oil production grows larger and larger, more and more wells will have to be drilled and fracked just to keep production level. At some point there will be a cross over between new wells coming on stream and old wells going out of production, so output will start to slip. The EIA recently noted that for North Dakota to increase its oil production by 20,000 barrels a day (b/d) next month, it must bring 94,000 b/d of new production online. At Texas’s Eagle Ford basin, it will take 152,000 b/d of new production next month to increase net production by 31,000 b/d.

There is no doubt that the shale oil drilling industry has made many significant technological advances in recent years. Multiple wells are now being drilled from a single drilling pad foregoing the need to move drilling rigs and setting up all the expensive infrastructure needed to frack shale wells. For a while shale oil drillers were drilling and fracking longer wells, which reduced the cost per barrel. Now we hear that drillers are increasing production per well by pumping more fracking materials down each well, and some are saying this will be enough to offset any decline in prices.

Currently US shale oil production is about 3 million b/d and in June output increased by about 100,000 b/d. About half of US shale oil production comes from North Dakota, where winter conditions are so harsh that production has been falling during the winter months.

The two major forecasting agencies, Washington’s EIA and Paris’ IEA, are both more pessimistic than is generally known for they both foresee US shale oil production leveling off as soon as 2016. The reason for this is that drillers will simply run out of new places to drill and frack new wells. While new techniques of extracting more oil from a well are possible, there is need to look closely at the costs of these techniques vs. the potential payoff.

The shale oil situation in Texas is somewhat different than in North Dakota, for there you have much better weather and two separate shale oil deposits. The recent growth in Texas’s shale oil production has been much smoother than in storm-prone North Dakota and has been increasing at about 44,000 b/d each month. So faras can be seen from the outside of the industry, production in both states will continue to grow for at least another year or two but then we will be at 2016.

The government has never gotten around to publishing the assumptions that go into the forecast that U.S. shale oil production will stop growing circa 2016. The biggest difference between EIA/IEA and independent analysts is the government forecasters do not see a precipitous drop in shale oil production following the peak. Instead they see a period of flat production followed by a gentle decline stretching well into the next decade. Such a gentle end to the shale oil “bubble” can only assuage fears of a calamity. This projection on a gentle end to U.S. shale oil is at variance with outside forecasters who note that shale oil wells are pretty well gone in three years and simply do not see where the oil to maintain production levels will be coming from for another 10 or 15 years after the peak.

Independent analyses of U.S. shale oil generally come to the same conclusion that production will peak in the 2016-2017 timeframe, but as noted above see a much faster decline than does the government.

There are however, other factors that could become the primary cause of world oil production peaking in the next few years. The first is the turmoil in the Middle East. A lot of oil production in the region has dropped off line in recent years for political reasons and Iraqi production is endangered. The spread of militant Islam could eventually threaten other major producers in the region as could the Arab-Israeli standoff.

A more recent development having serious long-term implications for the oil industry is the growing disparity between the cost of producing a new barrel of oil from the Canadian oil sands or deep below the ocean and the selling price of that oil. A recent study points out that many planned oil production projects are simply not economical at today’s oil prices, which have been relatively stable for the past five years as costs continued to soar. Oil companies are already cutting back on new drilling projects which will have little impact on current production, but will be very significant five years or so from now.

This article is a repost (8-25-14), credit: Post Carbon Institute.
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New UK record: nearly 15% of electricity from renewables, –more than half from wind

August 1, 2014 in EIA, Environment, EV News, Politics, Wind

Fossil fuels (petroleum and other liquids, natural gas, and coal) account for most of the United Kingdom's (UK) energy consumption. Although renewable energy use is growing, particularly in the electric power sector, fossil fuels accounted for 86% of total primary energy consumption in 2012.  Source: U.S. Energy Information Administration, from UK Department of Energy and Climate Change Courtesy of EIA

Fossil fuels (petroleum and other liquids, natural gas, and coal) account for most of the United Kingdom’s (UK) energy consumption. Although renewable energy use is growing, particularly in the electric power sector, fossil fuels accounted for 86% of total primary energy consumption in 2012. – EIA
Source: U.S. Energy Information Administration, from UK Department of Energy and Climate Change
Courtesy of EIA

RenewableUK says Government statistics released today (7-31-14) show that onshore and offshore wind energy is playing the central role in the country’s successful transition from fossil fuels to clean renewables.

In its annual Digest of UK Energy Statistics, the Department of Energy and Climate Change says electricity generated from renewable sources increased by 30% in 2013 compared to the previous year, and accounted for 14.9% of total UK electricity generation (up from 11.3% in 2012).

DECC says onshore wind continued to be the leading technology for generating electricity from renewable sources, providing 32% of the total, while offshore wind generated a further 21%, making a total of 53% of all renewable energy from wind. This means that 7.9% of the UK’s electricity was generated by onshore and offshore wind in 2013.

Offshore wind generation increased by 52%, and onshore wind generation increased by 40%. The installed capacity of renewables increased by 27% (4.2 gigawatts) to 19.7GW in 2013, mainly as a result of a 27% increase in onshore wind capacity (1.6GW) and a 23% increase in offshore wind capacity.

For the first time, more than 5% of the UK’s total energy supply (electricity, heat, and fuel for transport) came from renewables – up from 4.2% in 2012 to 5.2% in 2013. The UK needs to meet a legally binding target of 15% of all energy from renewables by 2020.

Both the onshore and offshore load factors (37.5% and 27.9%) exceeded or equalled that of gas (27.9%). Load factors for wind in 2013 were the highest since 1998, due to high wind speeds, particularly in the last quarter of the year.

RenewableUK’s Director of Policy Dr Gordon Edge said: “This abundance of excellent statistics should make those in Government who have failed to support wind energy sit up and take notice. More than half of Britain’s clean electricity now comes from onshore and offshore wind. We’re now on course to hit 10% of electricity from wind alone this year.

“That’s why it’s particularly puzzling to see some politicians fail to back the cheapest and most successful renewable technology, onshore wind, at a time when a majority of voters from all the main parties are telling them that they support it. Many will ask why some  Government Ministers act as cheerleaders for technologies like fracking for shale gas that can only deliver supplies years down the line, when wind is delivering here and now, onshore and offshore, keeping all our bills down by becoming more cost effective year after year.” 

This article is a repost (7-31-14), credit: RenewableUK.

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Nonhydro Renewables Now Routinely Surpass Hydropower Generation

July 31, 2014 in EIA, EV News, Geothermal, Greentech, Solar, Wind

 Source: U.S. Energy Information Administration, Electric Power Monthly and Short-Term Energy Outlook Courtesy of EIA

Source: U.S. Energy Information Administration, Electric Power Monthly and Short-Term Energy Outlook
Courtesy of EIA

April marked the eighth consecutive month that total monthly nonhydro renewable generation exceeded hydropower generation. Only a decade ago, hydropower—the historically dominant source of renewable generation—accounted for three times as much generation in the United States as nonhydro renewable sources (wind, solar, biomass, geothermal, landfill gas, and municipal solid waste).

The recent growth in wind and solar, which reflects policies such as state renewable portfolio standards and federal tax credits as well as declining costs of technology, has been the primary driver in the increasing market share of nonhydro renewable generation. There also has been growth in geothermal and biomass sources.

October 2012 was the first month on record in which nonhydro renewable generation exceeded hydropower generation. Although this reversal was short-lived because of the significant month-to-month variation in both hydro and nonhydro resources, the trend lines began to cross each other more frequently in the past year, with the most recent reversal lasting from September 2013 through April 2014. While hydropower once again exceeded nonhydro renewable generation in May 2014 (the latest available data), EIA projects that 2014 will be the first year in which annual nonhydro renewable generation surpasses annual hydropower generation. By 2040, nonhydro renewables are projected to provide more than twice as much generation as hydropower in EIA’s Annual Energy Outlook 2014 (AEO2014) Reference case, as discussed in the AEO2014 Market Trends. In other AEO cases that assume the continuation of tax credits or other policies that support nonhydro renewables, their overall generation and generation share relative to hydropower is much higher.

The dataset used to develop this article includes only generation from plants whose capacity exceeds 1 megawatt, and as a result does not include generation from most distributed solar PV capacity. Inclusion of distributed solar PV generation, which EIA estimates at roughly 10 billion kilowatthours in 2013, modestly accelerates the timing of the crossover between hydro and nonhydro renewable generation (see AEO2014).

Hydropower capacity has increased by slightly more than 1% over the past decade, although actual hydropower generation can vary noticeably by season depending on water supply conditions. Wind capacity, on the other hand, has increased nearly tenfold over that same period. Although wind often has lower capacity factors than hydropower, wind generation increased from 3% to more than 30% of total renewable generation between 2003 and 2013.

Hydropower does exceed nonhydro renewable generation in several states, particularly in the Northwest, where in 2013 conventional hydropower accounted for 69% and 56% of total electricity generation in Washington and Oregon, respectively. However, the market penetration of other renewables is growing in the United States, particularly in the Midwest and California. Between 2003 and 2013, the number of states for which nonhydro renewable generation exceeded hydropower generation, shaded green on the maps, nearly doubled—increasing from 17 to 33 over this period.

 Source: U.S. Energy Information Administration, Electricity data browser Courtesy of EIA

Source: U.S. Energy Information Administration, Electricity data browser
Courtesy of EIA

Principal contributors: Danielle Lowenthal-Savy, Michelle Bowman

This article is a repost, credit: EIA.

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Investing in renewables ‘top priority’ for energy security irrespective of voting intention, poll finds (UK)

July 25, 2014 in EIA, Environment, EV News, Greentech, Oil, Politics, Wind

By RenewableUK

Courtesy of EIA

Courtesy of EIA

Investing in renewables is seen as the top priority for maintaining energy security by nearly half the British population – a view reflected across voters of all four major political parties – according to new polling information conducted by ComRes on behalf of RenewableUK. This follows research published last week that found politicians opposing wind development are a turn off for voters.

48% of respondents chose investing in renewables as their number one priority, far ahead of the next most popular choice – building new nuclear reactors – which came in at 15%. Fracking came a distant fourth behind reducing consumption, including for half of people living in the 40 most marginal Labour/Conservative constituencies.

The opinion poll research revealed that of those surveyed:

· 48% of people want to prioritise developing renewables, 50% in marginals;

· Renewables were top priority among voters of the Conservatives, Labour, Lib Dems and UKIP, both nationally and in marginal seats;

· Fracking was the top priority for 13% of people, slumping to 8% in marginals;

Courtesy of EIA

Courtesy of EIA

The public also see securing our energy supplies as one of the most important priorities for the Government, with 53% of people citing it as a top 5 priority. Other issues considered a top five priority were unemployment, inflation, law and order and the NHS. Just 5% of people said reducing onshore wind farms should be a priority.

RenewableUK Chief Executive Maria McCaffery said: “This poll shows that the public want to tackle our energy security crisis by investing in renewables like wind, wave and tidal power and offsetting the need to import volatile and dirty fossil fuels from insecure parts of the world. Onshore wind, as the cheapest low carbon electricity source is a crucial component of that so it’s no wonder that the electorate will reject Parties that rule out its future use.”

This article is a repost, credit: RenewableUK.